Will Cryptocurrency Replace Banks?Ryan Tucker
When Bitcoin was first introduced, it promised a future free from banks and financial middlemen. From now on, every person was to be his own bank, and financial transactions could be made across borders and between individuals without having to resort to financial intermediaries. But since that time, the Bitcoin and cryptocurrency ecosystem has grown to encompass a wide variety of financial middlemen.
From cryptocurrency mining firms to wallet providers to cryptocurrency IRA providers to crypto exchanges, a whole host of companies have cropped up, providing useful services to cryptocurrency users and investors. And the more firms that are founded, the further cryptocurrencies seem from their original purpose of freeing individuals from the financial system. But could that change?
Some analysts believe that in an era of low interest rates, cryptocurrencies could end up replacing bank accounts. After all, if you can’t earn any money on your savings or checking accounts, why bother setting them up? It’s easier and cheaper in many cases to set up a cryptocurrency account. With the increasing popularity of stablecoins, which are supposed to be backed by fiat currency, even risk-averse cryptocurrency users can hold assets that are denominated 1:1 with their national currencies.
For those who prefer traditional cryptocurrencies such as Bitcoin, the wealth appreciation they offer means that account holdings gain value and purchasing power over time, rather than losing value in the case of fiat currencies such as the US dollar and the euro. And now that debit cards can be linked to cryptocurrencies, the opportunity to use cryptocurrencies as currencies is growing even faster than ever.
One of the next steps for cryptocurrencies may be for central banks to issue their own digital currencies. Along with them, they could also offer banking and account services, or contract that responsibility out to certain commercial banks.
But in both cases, the increased demand for and use of cryptocurrencies will mean a gradual move away from the modern-day banking system and its outmoded operations. When the cryptocurrency revolution really gets going, very few banks will remain standing once cryptocurrencies take hold, which will be great news for cryptocurrency users and investors.